FRS 12: an inter-industry study of its impact on share prices

This paper assesses the impact of the publication of FRS No. 12, 'Provisions, Contingent Liabilities and Contingent Assets' in 1998 on the share prices of UK companies. Although the standard affects all UK companies (restricting "big bath" provisions), it specifically requires extractive firms to make provisions for abandonment costs at the outset of the project. This additional requirement may cause FRS 12 to have a larger impact on companies in extractive industries compared to other companies. Using event study methodology, we find a positive share price impact on the release of FRS 12 for both extractive and other affected firms, although the abnormal returns are substantially lower for extractive firms. This suggests that, while investors welcomed the increased disclosure requirements, the mandatory requirements set by FRS 12 may be onerous for extractive firms. The abnormal returns were significantly lower for those firms reporting significantly increased provisions after the introduction of the new standard, consistent with the new provision requirements being costly for the companies most directly affected

R&D project announcements and the impact of ownership structure

This paper examines the stock market reaction to research and development (R&D) announcements made by listed UK companies. R&D projects on average are found to be associated with significant positive abnormal returns. However, the level of these abnormal returns varies significantly with the ownership structure of the firm. In particular, it is found that the level of abnormal returns are significantly lower for companies with large institutional investors. This negative relationship may be associated with short-term pressures on the performance of institutional investors

Joint venture investments and the market value of the firm

The impact of Joint Venture announcements on the market value of UK listed companies is examined. Based on a sample of 158 announcements of either joint venture formation or joint venture activities, significant positive market-adjusted abnormal returns of 0.5% on the announcement date are observed. Cross-sectional analysis reveals that abnormal returns are significantly lower when undertaken by large companies, or where the project is located in Asia. On the other hand, market-adjusted returns are found to be significantly higher when the project is large compared to the size of the company undertaking the investment, and where the project is either domestic or located within the European Union

Empirical evidence on the determinants of the stock market reaction to product and market diversification announcements

The announcement of product and market diversification projects lead to significant abnormal returns of 1.1%. However, the gains are higher for new products than for new markets, and for companies with high price-earnings ratios and low (or zero) dividend yields

Rethinking bank business models: the role of intangibles

<p>Purpose: This paper provides a new way of rethinking banking models by using qualitative research on intangibles. This is required because the banking sector has been transformed significantly by the changing environment over the past two decades. The 2007-2009 financial crisis also added to concerns about existing bank business models.</p> <p>Design/Methodology approach: Using qualitative data collected from interviews with bank managers and analysts in the UK, this paper develops a grounded theory of bank intangibles.</p> <p>Findings: The model reveals how intangibles and tangible/financial resources interact in the bank value creation process, how they actively respond to environmental changes, how bank intangibles are understood by external observers such as analysts, and how bankers and analysts differ in their views.</p> <p>Research implications: Grounded theory provides the means to further develop bank models as business models and theoretical models. This provides the means to think beyond conventional finance constructs and to relate bank models to a wider theoretical literature concerning intellectual capital, organisational and social systems theory, and ‘performativity’.</p> <p>Practical implications: Such development of bank models and of a systems perspective is critical to the understanding of banks by bankers, by observers and for their ‘critical and reflexive performativity’. It also has implications for systemic risk and bank regulation.</p> <p>Social implications: Improvement in bank models and their use in open and transparent processes are key means to improve public accountability of banks.</p> <p>Originality: The paper reveals the core role of intellectual capital (IC) in banks, in markets, and in developing theory and research at firm and system levels. </p&gt

Company investment announcements and the market value of the firm

This paper examines the stock market reaction to 402 company investment announcements made by UK companies during the 1991-1996 period. The market-adjusted abnormal returns are generally positive but small. Investment announcements are classified according to functional categories, and we find the level of abnormal returns to vary according to the type of capital investment being announced. In particular, we find the market to react more favourably to investments that 'create' future investment opportunities, than to investments which can be categorized as 'exercising' investment opportunities. The market reaction also varies with firm size, with large companies tending to experience smaller responses to announcements than do smaller firms. Chung et al. (1998) reported that the quality of a company's investment opportunities is the primary determinant of market reactions to capital expenditure decisions. The findings presented here lend some support to a role for investment opportunities in market valuations. Project size is also found to have a significant positive impact on the level of abnormal returns

An analysis of gains and losses to shareholders of foreign bidding companies engaged in cross-border acquisitions into the United Kingdom, 1986-1991

In this paper the gains and losses to shareholders of 71 foreign companies which made takeover bids for companies listed in the United Kingdom during the 1986-1991 period are analysed. The average abnormal return during the month of the bid announcement was positive, although not statistically significant. However, both prior to and sub-sequent to the bid announcement month, the overseas bidders earned highly significant negative abnormal returns. The cumulative abnormal returns over the five month period following the bid announcement were-4.77% with the index model and -9.79% with the market model. Further analysis established that Continental European companies performed significantly worse than American bidders. In addition, large companies and companies bidding for large targets, performed significantly better than the other bidders

Capital structure and its determinants in the United Kingdom – a decompositional analysis

Prior research on capital structure by Rajan and Zingales (1995) suggests that the level of gearing in UK companies is positively related to size and tangibility, and negatively correlated with profitability and the level of growth opportunities. However, as argued by Harris and Raviv (1991), 'The interpretation of results must be tempered by an awareness of the difficulties involved in measuring both leverage and the explanatory variables of interest'. In this study the focus is on the difficulties of measuring gearing, and the sensitivity of Rajan and Zingales' results to variations in gearing measures are tested. Based on an analysis of the capital structure of 822 UK companies, Rajan and Zingales' results are found to be highly definitional-dependent. The determinants of gearing appear to vary significantly, depending upon which component of debt is being analysed. In particular, significant differences are found in the determinants of long- and short-term forms of debt. Given that trade credit and equivalent, on average, accounts for more than 62% of total debt, the results are particularly sensitive to whether such debt is included in the gearing measure. It is argued, therefore, that analysis of capital structure is incomplete without a detailed examination of all forms of corporate debt

Testing for inconsistencies in the estimation of UK capital structure determinants

This article analyses the determinants of the capital structure of 1054 UK companies from 1991 to 1997, and the extent to which the influence of these determinants are affected by time-invariant firm-specific heterogeneity. Comparing the results of pooled OLS and fixed effects panel estimation, significant differences in the results are found. While the OLS results are generally consistent with prior literature, the results of our fixed effects panel estimation contradict many of the traditional theories of the determinants of corporate financial structure. This suggests that results of traditional studies may be biased owing to a failure to control for firm-specific, time-invariant heterogeneity. The results of the fixed effects panel estimation find larger companies to have higher levels of both long-term and short-term debt than do smaller firms, profitability to be negatively correlated with the level of gearing, although profitable firms tend to have more short-term bank borrowing than less profitable firms, and tangibility to positively influence the level of short-term bank borrowing, as well as all long-term debt elements. However, the level of growth opportunities appears to have little influence on the level of gearing, other than short-term bank borrowing, where a significant negative relationship is observed

The power of consoling presence - hospice nurses ’ lived experience with spiritual and existential care for the dying

This is an Open Access peer-reviewed scientific article originally published in the journal BMC Nursing. You can access the article by following this link: http://www.biomedcentral.com/bmcnurs/. The article is published under the Creative Commons Attribution License 4.0. Please consult BioMed Central's license agreement: http://www.biomedcentral.com/authors/license.Background: Being with dying people is an integral part of nursing, yet many nurses feel unprepared to accompany people through the process of dying, reporting a lack of skills in psychosocial and spiritual care, resulting in high levels of moral distress, grief and burnout. The aim of this study is to describe the meaning of hospice nurses’ lived experience with alleviating dying patients’ spiritual and existential suffering. Methods: This is a qualitative study. Hospice nurses were interviewed individually and asked to narrate about their experiences with giving spiritual and existential care to terminally ill hospice patients. Data analysis was conducted using phenomenological hermeneutical method. Results: The key spiritual and existential care themes identified, were sensing existential and spiritual distress, tuning inn and opening up, sensing the atmosphere in the room, being moved and touched, and consoling through silence, conversation and religious consolation. Conclusions: Consoling existential and spiritual distress is a deeply personal and relational practice. Nurses have a potential to alleviate existential and spiritual suffering through consoling presence. By connecting deeply with patients and their families, nurses have the possibility to affirm the patients’ strength and facilitate their courage to live a meaningful life and die a dignified death. Keywords: Dying, Spiritual and existential care, Hospice nursing, Consolation, Phenomenological hermeneutical stud